It's either a thermistor or a thermocouple (the former is my guess), and
these devices can fail in such a fashion that the resistance they attain at
a certain temp is incorrect. The circuits they are in are prone to reacting
to corroded connections too. As a general rule, the resistance they have is
higher at cold temperatures, so corrosion on the contacts can lead to lower
readings on the display.
A thermocouple and a thermistor behave similarly, although they achieve
results in a different manner. I do not think it is important which device
is used in your car. I think your problem is either a poor connection due to
the location of the connector, or the device itself is failing. As was
pointed out earlier, they generally are a go-no-go kind of device, so paly
with the connector for a few minutes, and replace the device next week if it
still does not read correctly.

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